Alex Liao
The Taiwan High Court rendered the 108-Lao-Shang-29 Decision of December 10, 2019 (hereinafter, the “Decision”), holding that to differentiate an employment contract from a contract for work, the main obligation is basically the major deciding factor. If the contract does not have all the various factors of an employment (e.g., whether the worker have the freedom to decide the manners of service provision or whether the worker shall bear the business risks), determination should be made based on the entirety of the contract and the main obligation.
According to the facts underlying this Decision, the Appellant was the insurance agent of the Appellee. On August 1, 2017, the Appellee terminated the contract for the failure of the Appellant’s sales performance to reach the evaluation target. The Appellant asserted as follows. He was a subordinate for being included by the Appellee in its production organization system. In addition, he had to clock in and sign in by 8:30 am, Monday through Friday, sign in twice in the daily morning meeting that lasted 1.5 hours and serve as the chairman on a rotational basis. If he failed to attend the meetings on Tuesdays and Wednesdays, he would be deemed absent for three days. In addition, the Appellant failed to take lighter measures such as counseling, disciplinary action, or job transfer before terminating the contract in violation of the requirement of termination as the last resort principle. The Appellant sought to confirm the existence of the employment relationship between the parties to compel the Appellee to pay the wages.
According to the Decision, it was announced in 1997 that the insurance industry would be governed by the Labor Standards Act beginning with April 1, 1998. Later, whether the employment executed by insurance solicitors so that they may solicit insurance business for the company they are affiliated with should be interpreted as an employment within the meaning of the Labor Standards Act, and whether insurance solicitors are governed by the Labor Standards Act and the Labor Pension Statute became controversial. According to Judicial Interpretation No. 740 issued by the Judicial Yuan, “whether the employment executed between insurance solicitors and the insurance company they are affiliated with is the employment set forth in Article 2, Subparagraph 6 of the Labor Standards Act should be determined based on whether the service obligors (insurance solicitors) may freely decide the manners in which the services are provided (including the work hours) and assume the business risks on their own (e.g., the insurance premiums collected for the solicited insurance are used as the basis for calculating the compensation). The Regulations Governing the Supervision of Insurance Solicitors shall not be relied on directly as the basis of determination.” Therefore, with respect to the categorization of contracts and for the type of contract basically determined by the main obligation, the above factors should be considered in order to determine if it is an employment. If it does not have all the factors of an employment, it should be determined by the entirety of the contract and the main obligation.
It was further pointed out in this Decision that the literal meaning of “contracting for work” specifically indicates in the contract between the parties that the provisions on contracting for work under the Civil Code shall be followed to address any controversy. In addition, in reference to the Appellee’s code of conduct and to the Appellant’s statement on the requirements for clocking in and signing in, attending meetings and serving as the chairman on a rotational basis, it is apparent that the insurance solicitors of the Appellee’s company were not required to turn out for work on a full-day basis, and that their activity participation rate was not required to reach 100%, which is different from the requirements for ordinary workers, who are required to turn out for work every day, and from an employment contract, which deals simply with the provision of services. Therefore, the Appellant’s claim that the contract between the parties was an employment contract is not acceptable. Since the nature of the contract between the parties is not employment under Article 2, Subparagraph 6 of the Labor Standards Act, the Appellant’s assertion is groundless.